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The Weekly Wrap: FED Chair Powell Delivered Dollar Support amidst a Hectic Economic Calendar

The Stats

It was a busier week on the economic calendar, in the week ending 3rd December.

A total of 86 stats were monitored, which was up from 50 stats in the week prior.

Of the 86 stats, 44 came in ahead forecasts, with 33 economic indicators coming up short of forecasts. There were 9 stats that were in line with forecasts in the week.

Looking at the numbers, 48 of the stats reflected an upward trend from previous figures. Of the remaining 38 stats, 31 reflected a deterioration from previous.

For the Greenback, it was a 6th consecutive week in the green. Market reaction to FED Chair Powell testimony on Capitol Hill drove the Dollar northwards. In the week ending 3rd December, the Dollar Spot Index rose by 0.03% to 96.117. In the previous week, the Dollar had risen by 0.04% to 96.071.

Out of the U.S

Early in the week, consumer confidence was in focus. Rising consumer prices and new COVID-19 cases weighed, with the CB Consumer Confidence Index falling from 111.6 to 109.5.

Mid-week, ADP nonfarm payrolls and ISM Manufacturing PMI numbers were market positive, however.

In November, the ADP reported a 534k increase in nonfarm payrolls, with the ISM Manufacturing PMI up from 60.8 to 61.1.

On Thursday, jobless claims increased from 194k to 222k in the week ending 26th November.

More significantly, however, continuous jobless claims fell from 2,063k to 1,956k. The fall to sub-2,000 was the first since March 2020, when continuous jobless claims had stood at 1,803k on 20th March.

Continuous jobless claims had peaked at 25,073k back in May 2020.

At the end of the week, nonfarm payrolls and ISM Non-Manufacturing PMI figures were the key stats, however.

In November, nonfarm payrolls rose by just 210k. While the rise was modest, the unemployment rate fell from 4.6% to 4.2%. This was in spite of the participation rate increasing from 61.6% to 61.8%.

Service sector PMIs also impressed, with the ISM Non-Manufacturing PMI rising from 66.7 to 69.1 in November.

While the stats provided direction in the week, FED Chair Powell testimony was pivotal for the markets. The FED Chair talked of the need to discuss speeding up the tapering of bond purchases. Powell also said that the reference to transitory, in relation to inflation, should be removed, raising the chances of a sooner than expected rate hike.

Out of the UK

It was a relatively quiet week, with finalized service sector and composite PMIs in focus at the end of the week.

The services PMI rose from 54.6 to 58.5 in November, which was down from a prelim 58.6.

In the week, the Pound declined by 0.76% to end the week at $1.3236. In the week prior, the Pound had fallen by 0.85% to $1.3337.

The FTSE100 ended the week up by 1.11%, partially reversing a 2.49% loss from the previous week.

Out of the Eurozone

It was a particularly busy week.

Member state and Eurozone inflation and private sector PMIs for November were the key stats.

Inflationary pressures continued to pick up, with the Eurozone’s annual rate of inflation accelerating from 4.1% to 4.9%.

Private sector PMIs were largely market positive, with the Eurozone’s composite PMI up from 54.2 to 55.4.

Other stats included French consumer spending and German unemployment figures, which were mixed.

Consumer spending fell in France, while unemployment fell in Germany. With new restrictions being imposed across member states to curb the spread of COVID-19, the market response was muted.

For the week, the EUR slipped by 0.02% to $1.1315. In the week prior, the EUR had risen by 0.24% to $1.1317.

The CAC40 rose by 0.38%, while the DAX30 and the EuroStoxx600 ended the week with losses of 0.57% and 0.28% respectively.

For the Loonie

GDP and unemployment figures were key stats ahead of next week’s BoC monetary policy decision.

In the 3rd quarter, the Canadian economy expanded by 1.3% after having contracted by 0.8% in the previous quarter. On an annualized basis, the economy grew by 5.4% in the quarter.

Employment figures were also upbeat, with employment rising by 153.7k in November. As a result, Canada’s unemployment rate fell from 6.7% to 6.0% in the month.

In the week ending 3rd December, the Loonie declined by 0.41% to C$1.2843. In the week prior, the Loonie had fallen by 1.19% to C$1.2791.

Elsewhere

It was yet another bearish week for the Aussie Dollar and the Kiwi Dollar.

The Aussie Dollar slid by 1.71% to $0.7001, with the Kiwi Dollar falling by 0.73% to end the week at $0.6772.

For the Aussie Dollar

Company gross operating profits and private sector credit figures were in focus early in the week.

In the 3rd quarter, profits rose by 4.0% off the back of a 7.1% jump in the quarter prior. Private sector credit increased by just 0.5% in October, however, easing from a 0.6% rise in the month prior.

Mid-week, GDP numbers for the 3rd quarter delivered some comfort, with the economy contracting less than expected.

Quarter-on-quarter, the economy contracted by 1.9% versus a forecasted 2.7% contraction. The economy had expanded by 0.7% in the previous quarter.

Late in the week, trade data drew little interest in spite of a narrowing of the trade surplus from A$12.243bn to A$11.220bn.

For the Kiwi Dollar

It was a quiet week, with business confidence in focus. A fall from -13.4 to -16.4 in November weighed on the Kiwi early in the week.

COVID-19 and downside risks to the economic recovery ultimately did the damage, however.

For the Japanese Yen

Retail sales impressed early in the week, with sales up by 0.9% in October, year-on-year. In September, retail sales had been down by 0.5%.

Industrial production was also on the rise according to prelim figures. In October, production rose by 1.1% after having fallen by 5.4% in September.

Finalized private sector PMIs wrapped up a positive week on the economic data front. The services PMI rose from 50.7 to 53.0 in November, which was up from a prelim 52.1.

The Japanese Yen rose by 0.51% to ¥112.800 against the U.S Dollar. In the week prior, the Yen had risen by 0.54% to ¥113.380.

Out of China

Private sector PMIs for November were in focus.

The all-important Caixin manufacturing PMI fell from 50.6 to 49.9, with the Caixin services PMI falling from 53.8 to 52.1.

In the week ending 3rd December, the Chinese Yuan rose by 0.26% to CNY6.3764. In the week prior, the Yuan had ended the week down by 0.10% to CNY6.3933.

The CSI300 rose by 0.84%, while the Hang Seng fell by 1.30%.